What is an insurance trust?
An insurance trust is a wealth transfer tool that combines life insurance and trusts. The insurance policy serves as the trust asset,
with the trust company serving as the policyholder and the beneficiary of the life insurance.
The client establishes the insurance trust as the settlor, transferring the life insurance policy to the trust and designating the intended trust beneficiary.
During the life insurance claim process, the death benefit is paid directly to the insurance trust, becoming trust assets. The trustee manages the trust assets and distributes them to the designated trust beneficiaries according to the trust agreement.
How can an insurance trust help me?
- Flexible distribution arrangement
An insurance trust allows for flexible and customized distribution of funds, to ensure that the insurance proceeds are managed according to your wishes, at the time and under the conditions you specify. - Protection of minor beneficiaries
If the designated beneficiary is a minor, the trustee manages the insurance proceeds according to the trust agreement, paying for the beneficiary’s expenses to ensure that they are properly protected.
- Preservation of family wealth
By planning the distribution in advance, the insurance trust helps avoid depletion of the trust assets due to poor financial management by the beneficiaries. You can also designate unborn descendants as trust beneficiaries to ensure that family wealth is passed down through generations.
- Increased confidentiality
Since the trust is a private arrangement, all information is kept confidential, providing increased privacy protection for the settlor and reducing the risk of unnecessary disputes. - Simplified process
Insurance proceeds are paid directly to the insurance trust and distributed by trustee to beneficiaries in accordance with the trust deed, which saves time for the process of probate and freezing of assets.
If you would like learn more about insurance trusts, feel free to contact us.
